Long-Run Living StandardsAs I discussed in Lecture 1, what data we have is consistent with thehypothesis that living standards were unchanged during the millenniaprior to the industrial revolution.I also pointed out that this fact masked a lot of interesting dynamics.Maybe it was true that at some point after 200BCE living standardsin Greece returned to what they had been in 800BCE (though thismay not have happened until the Dark Ages and even then possiblynot since Greece remained within the scope of the relatively functionalByzantine Empire). But this fact ignores that for 600 years livingstandards appear to have increased even though population was rising.The conventional wisdom in economic history on long-run livingstandards prior to the industrial revolution is provided by theMalthusian modelJames A. Robinson(Harvard)The Emergence of Modern Economic Growth: A Comparative and Historical Analysis: LSeptember 28, 20092 / 25

The Malthusian ModelThe simplest (non-optimizing) version of the model deaths are adecreasing function of income,D(y)withD0<0 while births,B, areindependent of income. Population dynamics are as follows˙N>0 ifB>D(y)and˙N<0 ifB<D(y). Finally income per-capita isdecreasing inN(according to diminishing marginal product of labor)so there is a functiony=Af(N)withy0<0.There is a unique attracting steady-state with˙N=0 where incomeper-capitay°is de°ned byB=D(y°)and steady-state populationN°=f±1(y°A).James A. Robinson(Harvard)The Emergence of Modern Economic Growth: A Comparative and Historical Analysis: LSeptember 28, 20093 / 25

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Comparative StaticsIncome per-capita always returns to the point where the birth rate isequal to the death rate. This is the unique attracting steady-state ofthe model.What happens if TFP improves fromAtoA0>A? This means moreoutput for any level of population. The initial level of populationN°now produces an income levely0>y°. This leads to higher incomesand an excess of births over deaths sinceB>D(y0). In consequencethe population expands fromN°toN0until income per-capita isdriven back down to where it was before.The same is true for other changes which have similar implications forthe relationship between population and income, for instance goodgovernment. Low taxes and secure property rights.What determines income per-capita is the position of the birth anddeath schedules.James A. Robinson(Harvard)The Emergence of Modern Economic Growth: A Comparative and Historical Analysis: LSeptember 28, 20094 / 25

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